Three deposits you must know
SAVINGS DEPOSIT
Savings deposit is the money you keep in your savings bank account. The money that lies in your savings account earns an annual interest. Interest rate varies from bank to bank and is also based on the amount that you leave in the account. Usually, the interest rate ranges between 3.5% and 7.1% an annum. For instance, State Bank of India offers 3.5% interest an annum on an amount up to ₹1 crore. However, for an amount over ₹1 crore, the bank gives an interest rate of 4% an annum. Meanwhile, Kotak Mahindra Bank Ltd offers 6% interest rate on a deposit of over ₹1 lakh to ₹1 crore.
FIXED DEPOSIT
Banks as well as deposit-taking nonbanking finance companies (NBFC) offer fixed deposits. Here you have to invest for a fixed tenure. Banks and NBFCS offer interest rate in the range of 5-9% an annum on FDS. FDS usually come with a lock-in period. There are two kinds of FDS—FD with premature withdrawal options and without premature withdrawal option. FDS with premature withdrawal allow you to withdraw money before maturity. However, you will have to pay a penalty. In case of FDS without premature withdrawal, you can’t withdraw money before maturity. The tenure ranges between 7 days and 10 years.
RECURRING DEPOSIT
Persistency ratio in the life insurance space is a measure of total volume of business that an insurance company is able to retain within a single financial year without any lapse in policies or loss of premium amount to rivals in the industry. IRDA mandates
insurers to retain 50% of their clients. Recurring deposits allow you to invest money on a monthly basis. You can earn an interest rate in the range of 6-8.5%. If you invest ₹1,000 a month in a recurring deposit with HDFC Bank Ltd, you will earn at an interest rate of 6.85%. On maturity you will earn ₹12,453, of which ₹453 will be your interest income. Canara Bank offers an RD starting from ₹50. Here, there is no ceiling on maximum amount. For senior citizens, the bank offers return at an interest of 0.50% over and above the rate for general public. The bank allows tenure from 6 months to 10 years. ASHFAQUE ISMAIL
WHAT IS IT? HOW IT IMPACTS YOU?
This ratio is a measure of an insurer's profitability, as it assesses for how long the consumer will hold the policy and stay with the insurer. Pick an insurer of your choice. Poor ratio negatively impacts the profitability of the insurer. It is a useful indicator when you are buying the stock
of an insurance company.